China’s intelligence services are using a private exchange program for retired U.S. and Chinese generals to influence the U.S. government and downplay Beijing’s large-scale military buildup, according to a congressional report.

The Sanya Initiative launched in 2008 with support from retired Adm. Bill Owens, a former vice chairman of the Joint Chiefs of Staff, and the China Association for International Friendly Contact (CAIFC), a Chinese military front organization, the report said.

The intelligence and influence effort was outlined in a late draft of the commission’s 2011 annual report. However, the section containing details of the intelligence links was left out of the commission’s final report made public in November.

A U.S. official said the passage’s deletion occurred because some of Sanya’s U.S. participants and senior commission members were concerned about portraying the exchange program negatively. The Washington Free Beacon obtained a copy of the omitted material.

William Reinsch, China commission chairman for the 2011 cycle, did not disclose why the material was excised. In an email he wrote, "While I supported the action taken, I was neither the lead nor sole proponent of it."

According to the report, "the leading Chinese figure in the PLA delegations participating in the first two rounds of Sanya Initiative dialogues was retired Gen. Xiong Guangkai, the former deputy chief of the PLA general staff who was director of PLA Intelligence."

Xiong "has remained active in public affairs since his retirement in 2007, serving as chairman of the Chinese Institute of International Strategic Studies, a think tank directly affiliated with PLA intelligence," the report said.

The PLA influence operation used the retired military officers to convey Chinese propaganda and policy messages to Congress and the Pentagon, including during meetings in 2009 with then-Chairman of the Joint Chiefs of Staff Adm. Mike Mullen, briefings to the Pentagon’s advisory Defense Policy Board, and lobbying against the annual Pentagon report on China’s military.

The Chinese sponsor of Sanya, CAIFC, worked closely with the Chinese military’s Foreign Affairs Office "to raise the idea and secure the necessary approvals" for the exchange program.

"While nominally a civic organization promoting international exchanges, the China Association for International Friendly Contact is actually a front organization for the International Liaison Department of the PLA General Political Department," the report said.

According to the report, the PLA uses CAIFC as a cover name for carrying out "ideological and political work on foreign armies, [to] explain China's policies, and [to] disintegrate enemy armies by dampening their morale."

The report also said the Chinese sponsor of Sanya "is linked to the Intelligence Bureau of the Liaison Department of the PLA’s General Political Department … [with additional] ties to both the Ministry of State Security and the Ministry of Foreign Affairs." The Ministry of State Security is China’s civilian intelligence service. The Liaison Department of the PLA is in charge of "conducting propaganda and psychological operations directed at other militaries."

"The Liaison Department conducts its perception management operations in accordance with centrally determined [Chinese Communist Party] propaganda messages," the report said, quoting a Defense Intelligence Agency analyst as saying that propaganda programs are implemented through PLA public and intelligence channels under the direction of political commissars.

In 2009 the office of the Director of National Intelligence identified the Chinese liaison office as a "major collector" of intelligence against U.S. interests, the report said.

Larry Wortzel, a U.S.-China Economic and Security Review Commission member, told the Free Beacon that the Chinese military skillfully uses political and intelligence units to cultivate relationships with retired U.S. and other foreign military officers.

"One way it has done this is by using the China Association for International Friendly Contact," he said. "Its programs have sought to invite retired US officers to China as well as to cultivate representatives of U.S. defense industries. My experience in contact with groups brought to China by CAIFC shows that often the U.S. visitors are offered business or partnership opportunities in China."

Kenneth E. deGraffenreid, formerly a senior U.S. counterintelligence policymaker, said in an interview that the retired officers’ effort highlights the Chinese government’s roots in the communist movement. "Subversion—the technical term—is their foremost stock in trade," he said. "The regimes of this movement employ a number of political warfare/influence operation techniques which mislead the West because they are used as weapons, not as a means of cooperative relations."

Western states regard exchanges and meetings as part of free, informed, open discussions while the Chinese regard them as part of a political warfare struggle, he said.

"Many in the West have been, and are being yet again, duped just as they were when the PRC and the late Soviets used them in the 20th century," Mr. deGraffenreid said, noting that the FBI has been "gun shy" in using its counterintelligence operations to halt the activities as a result of poor counter-spying and strong political reactions from the pro-China lobby in the United States.

"The role of PRC military intelligence entities in the Sanya exchanges, and the consistency of messages from the Chinese participants with official PRC narratives, both strongly suggest that the Chinese government has intended the exchanges as a channel for communicating to the U.S. policy community the [Chinese Communist Party’s] preferred narratives on national security issues," the report said.

Owens was quoted in the report as saying a central goal of Sanya is to "convey accurate and relevant information to key decision makers and national leaders in China and [the United States]," the report said.

"U.S. participants in the Sanya Initiative have made a number of proposals and recommendations on U.S.-China policy that closely parallel themes emerging from their meetings with PLA counterparts," the report said.

For example, Owens told a conference in Washington in 2008 that China’s policy was peaceful; that China did not seek to be a superpower; and that "China’s intentions toward its neighbors are peaceful and neither irredentist or hegemonic." All those themes have been identified as Chinese propaganda messages.

Retired Air Force Gen. Ronald Fogleman, a former Air Force chief of staff, was also identified as a Sanya participant who echoed PLA propaganda themes at the same meeting. Fogleman "warned that the United States risked making China into an adversary through the U.S.’s own actions," the report said.

The report said Owens also has repeated China policy themes in op-ed articles in newspapers, and in one called for the United States to review the 1979 Taiwan Relations Act because it is the basis for selling arms to Taiwan and "is not in our best interest."

China’s government and military has said repeatedly that the United States must not sell arms to Taiwan, which the Chinese regard independent as a breakaway province.

The Sanya Initiative has also targeted the annual Pentagon report to Congress on China’s military, a report frequently criticized by the PRC as an exaggeration of China’s military intentions. The congressional report stated that U.S. members of Sanya were "asked by their PLA counterparts … to use their influence to press for a delay in the publication of the Pentagon’s ‘Military Power of the People’s Republic of China’ report to Congress." It said Fogelman had contacted U.S. government officials to propose this but was not successful.

Congress changed the name of the annual Pentagon report from the "Military Power of the People’s Republic of China," to the "Military and Security Developments Involving the People’s Republic of China," in 2010, however. Some congressional aides said this was an effort by Congress to soften the report.

Initiative launched in 2008

Sanya launched in February 2008 after Owens and CAIFC hosted a series of meetings in Beijing and the city of Sanya on Hainan Island in the South China Sea.

In addition to Owens and Fogleman, U.S. participants have included retired Army Gen. John M. Keane, former Army vice chief of staff, and retired Marine Corps Gen. General Charles E. Wilhelm, former commander of U.S. Southern Command. Chinese participants have included Xiong and four other retired PLA generals.

A 2008 report produced by Sanya listed "key outcomes" of the first meeting. Included on the list was that "American and Chinese Generals agree that they are in an excellent position to convey information to key decision makers and national leaders."

According to Sanya report, "all four American generals have already begun to discuss writing op-ed pieces to provide a counterpoint to the current writing about China’s military, for example that of Bill Gertz…."

Owens, since retiring from the military, has been engaged in business in China, where government connections with Chinese leaders is considered essential to success.

A spokeswoman for Owens had no immediate comment. However, last year he responded to written questions, saying that he started Sanya based on his belief that the initiative would serve U.S. interests for retired U.S. and Chinese generals to meet once a year for discussions about military relations.

"This project has the full knowledge and support of senior government officials, and the work that I do has been conducted in close consultation with the U.S. Embassy and policy makers in Washington," Owens said. "It has been undertaken with clear attention to America’s security and best interests."

Regarding his contacts with Xiong, the former PLA intelligence chief, Owens said the retired Chinese general was his counterpart for the first two Sanya meetings and is no longer involved.

"Regarding the Pentagon’s annual report on China’s military build-up, the Chinese raised it in the first Sanya Initiative meeting two years ago, but I have never worked on my own or with the Sanya Initiative to lobby Congress or the executive branch to change this report," he said.

Asked about reports that he had earned as much as $100 million through investments and businesses based in Hong Kong, Owens declined to comment on his personal finances.

Fogleman and Wilhelm could not be reached for comment and Keane said he has not been associated with the group since 2008.

Other Sanya participants have included retired Adm. Joseph Prueher, a former U.S. Pacific Command commander and former ambassador to China, and retired Adm. Timothy Keating, another former Pacific Command leader, according to the report.

Prueher headed an academic commission on China at the University of Virginia that produced a report in April 2011 that sought to play down the threat emanating from China’s development, the report said.

That commission’s recommendations closely aligned with Chinese propaganda from the Sanya program on Taiwan in opposing U.S. arms sales to Taiwan and reviewing U.S. policy on the transfers, according to the U.S.-China Economic and Security Review Commission’s report.

The congressional report said Prueher’s commission played down "the Communist identity of China’s ruling party—a staple of PRC messages to foreign audiences" and made the questionable assertion that "it is accurate for Americans to view and interpret China as ‘Chinese’ rather than as ‘Communist,’ as they are pragmatically, rather than philosophically, driven."

The Sanya group met in 2008 in China, in 2009 in Hawaii, New York, and Washington, and in Beijing in 2010. The 2010 session was hosted by Chinese Gen. Xu Caihou, vice chairman of the Chinese Central Military Commission, China’s highest organ of power, and by Gen. Liu Zhenqi, deputy director of the PLA General Political Department.

The report said that during the meeting Xu called on the United States to "‘to respect and accommodate China's core interests and major concerns’ in order to further bilateral military ties."

The Pentagon has tried for the past decade to develop closer military relations with the PLA. But China’s military continues to view the Pentagon as its main enemy and relations and exchanges have been stymied. Beijing cut off the military exchanges twice in recent years to protest U.S. arms sales to Taiwan.

The report also asserted that the United States is wrong to seek a democratic government in China because "a complete democracy is not necessarily the best model for the Chinese at this time."